Here’s a quick chart of a three and a half decade long trend. It’s the 30-yr Treasury Bond index.
While I’ve always said that this is one market that doesn’t have as great of a late 90’s correlation…the interesting similarity here to late 1998 is that prices had significantly deviated away from their longer term trend. A little bond market volatility here and a shit show begins.
Here’s a closer look at 1998. After a 2 year long run away from the trend, the meltdown was fairly bloody.
After a nice 2+ year move away from the trend, prices are slowly coming into support.
Something to keep an eye on. Also, investors fled stock funds at the fastest pace of the year this week.
Have a good weekend.
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Chances Fed raises 0%
Chances market raises ……….well it would be stupid to put a number here but they are significantly higher then that of the Feds.
I know what Fed fund futures suggest, but surprise volatility in bonds fucks so much of that ‘risk a dollar to make a nickel’ crowd.
Pardon my ignorance but will we really crash if they raise .25. It would have minimal impact on the economy. Especially to the average investor considering that mortgage and loans rate are a reflection of prime but subject to lender adjustment regardless of the prime rate. Also corporate borrowing though impacted wouldn’t be quashed from such a minimal raise. The last hike had essentially no overall economic impact from my understanding.
Bro, the bond market. If you’re into bonds at these prices, you stand to lose much more than you make. Historically, a blue chip with a respectable dividend becomes a safer play.
The resemblance is striking. Very interesting indeed.
Good post OA. The only thing that has me worried is Gartman saying Fed will NOT raise. Maybe he’ll be right for once (in Algerian Budju terms).
Even a blind squirrel finds a nut every now and then.
If investors are given an excuse to exit bonds stocks could surge, as long as there’s some appetite for risk. This could be a positive catalyst.
Wouldn’t stocks surge before the fund managers jump in? At that point you’ve given up some sizeable returns.
Says who? The money for the surge has to come from somewhere and bonds are incredibly over-owned here.
I’m not 100% that equities get the flows from a bond market rout, but if they do new ATHs should be on the horizon.
Well, look at what stocks did when bonds turned back into their primary trends. The other similar set-ups on that 30 year chart were 1994, 1998, 2003 and 2012.
Look at the commodity index. That tells the story.
And Yellen is a liar, the worst Fed we have had.
Lower for longer commodity prices. Can’t wait for people to start talking the stimulative effects that will have.
I am in the opposite camp on this one, but I suppose some of the difference may be in how you define ‘longer’.
I am long DO as soon as it closes above the 10 dma. Interested in ags plays long term as well
East coast refiners should be getting a bump from the AL colonial pipeline spill last Thurs. 6,000 barrels
Any view on ORCL here?
Dude .. ORCL is still high as shit.
Def needs to come in a lot b4 thinking of picking up this name. I’d start getting interested if it was in the low 30’s
When a perma-bull becomes bearish, everyone should take notice.
Who tuned bearish?
I figured this post was bearish, no?
Not against stocks, no.
I’m not permabull either. I’ll bet against stocks when the mood changes and there is significant downside involved. I bet against plenty of stocks in late 06-07. Blogged about it too. Otherwise, the odds fall in favor of the trend in my opinion.
Are we supposed to be able to read your mind? How about a little more info
He doesn’t owe us anything. I appreciate what he shares. Can’t complain when a blogger shares winning trades for free. Subscribe to AOWOA for a boot camp and see how his method works. Jeff is quite successful at what he does.
Formergeek, perhaps you can say what info you want from OA, and he can give it if he has the time and the interest to do so. There are some kinds of answers he’s willing to give. And other kinds that he’s not willing to give– the kinds of answers that would be sending him off on a tangent from what he is doing, disrupting his otherwise laser like focus on the markets.
Frog my reply was to sethster
Lol. You got frogged….
Fomerrgeek, oh I understand now, you weren’t addressing OA but addressing Sethster’s comment about a permabull becoming bearish.
Sorry, hard to keep up with all the replies to replies to replies here on the thread sometimes.
Think OA can handle this himself and doesn’t need others chirping in. Like freakin’ high school here at times.
OA, do you have any thoughts on the mj space, tickers or related plays you are in?
Played many of them earlier this year, now it depends on he ticker here.
Thanks, I am in CBDS a bit lower, liking the action on the pullback.
I was talking to you not OA. Now I see you just don’t comprehend OA’s posts
This was to Sethster
OA, it seems there should be rotation into value stocks from growth here. Is that your take?
That was why I bought Apple last week.
Gotcha, you the man OA
When was the last poll taken? Results?
60-40. Been as high as 70-30. Nothing extreme in awhile.
Started the morning with some UVXY 20.31
Asshole $LABU. Unbelievable.
Next trade dude, work on the emotion for the next one.
Bullish reversal in oil. Picked up UWTI
but for how long?
$UAL for 55 and above?
$55 was the pocket play we looked at back in mid-August. Find another.